Cain v. United States

• Decision Date: 07 June 1954
• Docket Number: No. 14800.,14800.
• Citation: 211 F.2d 375
• Parties: CAIN et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

211 F.2d 375 (1954)

CAIN et al. v. UNITED STATES.

No. 14800.

United States Court of Appeals Fifth Circuit.

March 19, 1954.

Writ of Certiorari Denied June 7, 1954.

Norman B. Gillis, Jr., McComb, Miss., for appellants.

H. Brian Holland, Asst. Atty. Gen., Ellis N. Slack, Spl. Asst. Atty. Gen., Frederic G. Rita, Spl. Asst. Atty. Gen., Robert E. Hauberg, U. S. Atty., Jackson, Miss., Andrew F. Oehmann, Special Assts. to the Atty. Gen., for appellee.

Before HUTCHESON, Chief Judge, and HOLMES and BORAH, Circuit Judges.

Writ of Certiorari Denied June 7, 1954. See 74 S.Ct. 868.

HUTCHESON, Chief Judge.

What is for decision here is whether, as was claimed by the plaintiff below, the appellee here, and determined by the district judge in a thorough and careful opinion,¹ the exactions imposed upon Mary D. Cain, one of the defendants below, appellants here, on account of her income from self employment, are income taxes legally assessed under the Self Employment Contributions Act,² or whether, as claimed by appellants, they are illegal and uncollectible exactions imposed not in the exercise of the taxing power, as that power has been delegated to the United States, but in the exercise of an unconstitutional exertion of a power not delegated by, but reserved to, and in, the states.

Brought here upon a record consisting of an agreed statement of facts under Rule 76 of the Federal Rules of Civil Procedure, 28 U.S.C.A., and of the opinion of the district judge, the case sharply presents a single question of law. Appellants argue it as though it were an entirely new one, while the district judge held, and appellee insists, that it was determined against appellants' contention, and further discussion of it was foreclosed in Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, and Helvering v. Davis, 301 U.S. 619, 57 S.Ct. 904, 81 L.Ed. 1307, to which appellee adds the decision of this court in Abney v. Campbell, 5 Cir., 206 F.2d 836.

Appellants recognize the binding force upon them and upon us of the determinations made in the decisions cited. They insist, though, that this case differs from those cases in two particulars. One of these is that the exactions in question in them were exactions imposed on employers as imposts or excise taxes, under Art. I, § 8 of the Constitution, while those in question here are sought to be imposed upon employees as income taxes on self employment income. The other is that, while both those exactions and these are imposed as a part of the general scheme or plan for social security, those dealt with in the cited cases were imposed and collected as taxes and when collected became a part of the general revenue, while those imposed under the act in question here are not imposed and collected as, and do not become a part of, the general revenue, but are earmarked and appropriated in their entirety in advance to a special fund intended solely to make self supporting the compulsory insurance system it is set up to afford.³ Thus, while the exactions in those cases might properly have been justified upon the ground that what Congress might have intended to, or did, do with taxes imposed and collected legally was a matter of no concern to the persons taxed if only the impositions were within its taxing powers, such reasoning cannot be properly resorted to here.

So insisting, they argue that the exactions dealt with in this case cannot be separated from the unauthorized uses which they are intended to serve and to which they are in fact put, and thus they may not be held to be general taxes, legally levied and collected, though they may later be diverted to unauthorized uses. They must be held to be exactions in aid of a purpose beyond the power of congress to achieve and therefore not lawful taxes but unlawful exactions. They declare that this precise difference in the law under which these moneys are exacted and sought to be collected from the defendant, Mrs. Cain, makes this case a different one from all the others and furnishes the courts, unembarrassed by the complicated sophistries and fallacies which have distorted the prior decisions, an opportunity to grapple directly with the question here presented, whether the avowed purpose of the exactions to provide compulsory insurance protection for its victims is within or beyond congressional power.

The United States, vigorously opposing this view, urges upon us that the taxes imposed under the statute as amended in 1950 stand no differently from those imposed and collected under prior statutes. Denying that the funds collected under the Self Employment amendment are so earmarked for the Federal Old Age and Survivors Insurance Trust Fund that the validity of the tax must stand or fall with the validity of the purpose to provide compulsory insurance protection, they insist further that if appellant's assumption is true, this would not invalidate the statute. Relying on the two Davis cases and the Abney case, supra, they strongly insist that this case is in no respect different from those and that there can be no more question of the constitutionality of Section 208(a) of the Social Security Act Amendment of 1950, which added to Chapter I of the Internal Revenue Code relating to Income Taxes, §§ 480 to 482, (The "Self Employment Contributions" Act), than there was of the statutes held valid in the earlier cases.

While we are in agreement with appellee that the exactions in question here are taxes constitutionally and legally laid and collectible, we agree with appellants that the question presented here, though the answer to it is in essence and in substance the same, is in several aspects of it a...